Apple deal with China Mobile

China has been a vibrant money machine for Apple.
In just four years since opening its first retail Apple Store in 2008 – the market has grown from just a “few hundred million dollars” up to $12.4 billion in sales during the first half of 2012.
Analysts expect that Apple may pass $25 billion by the end of this calendar.

China Telecom says it plans to begin selling the iPhone 5 in late November or early December, a little earlier than expected.
During Apple’s FQ4 call, Tim Cook would only say Apple expects a December Chinese launch.
China Unicom’s chairman is more cautious in setting a timetable.
Meanwhile, RBC is predicting Apple will finally reach a deal with China Mobile in 2013, perhaps even before the Chinese New Year.

CNET reports that distributors are bullish on Apple sales for the iPhone 5 and the iPad Mini in China, particularly given the lower cost of the Mini relative to its more established, larger predecessor.
Along with Morgan Stanley, Gartner analysts are also bullish on the iPhone 5 launch in China this quarter, according to Apple Insider. The firm expects the holiday quarter will be Apple’s strongest, as it usually is for the company.
The new China government is expected to issue 4G LTE licenses for the Chinese market in the second half of 2013. Observers are also praying that Apple can finally secure a distribution deal around the same time with China’s largest Telco China Mobile (NYSE:CHL) to carry the iPhone. The two developments would unleash all the 4G phone’s gold standard features and presumably lead to a boom in Chinese Apple sales.
As a consumer driven stock with dividend yield and potential Apple upside, China Mobile is a great way to play China.

China Unicom has sold iPhones in China for more than two years now, whereas China Telecom just began offering the iPhones in China early this year and thus has less experience with the product and working with Apple.
But this lengthy delay by the telecoms regulator is starting to look increasingly strange,
China Mobile , has perhaps played an obstructionist role to keep the new iPhone out of China as long as possible to undercut its rivals.
China Telecom may beat Unicom in offering the iPhone 5 first in China, though it won’t really matter since the product has already been available globally for more than two months.

Apple’s fans on the Chinese mainland have so far had to turn to rival carriers, China Unicom Hong Kong Ltd. and China Telecom Corp., which unveiled iPhone subscriber packages in 2009 and 2012, respectively. Both carriers have based their 3G rollouts on internationally used standards.
Barlcays analyst Anand Ramachandran in Hong Kong cautions investors to think twice before piling into shares of China Mobile, even though he says it’s not out of the question that China’s dominant telecom could get a deal on the iPhone in 2013.

Apple Asian news:
1) The iPad Mini has launched to sparse crowds in China. The regular iPad controlled 71% of the Chinese tablet market in Q3, according to Analysys.
2) China Unicom took over 200K iPhone 5 pre-orders in its first 2 days of availability. Unicom is fully subsidizing the phone to those who make a $947 deposit.
3) NTT DoCoMo is facing more pressure to strike an iPhone deal (previous): the top Japanese carrier lost 40.8K subs in November to rivals SoftBank and KDDI.
Apple’s Japanese sales rose 113% Y/Y in FQ4

The “next big thing” from Apple might not be a smartphone, tablet, computer or a television, as countless recent rumors have suggested. It might not even be a service like a Pandora competitor or a new TV service tied to an Apple set-top box. Instead, Morgan Stanley analyst Katy Huberty believes the next big thing for Apple will be a deal.
In the December 10th issue of Forbes magazine, Connie Guglielmo writes that the iPhone’s eventual arrival on China Mobile, China’s biggest wireless carrier, will be Apple’s next big catalyst.
According to Morgan Stanley’s Huberty, who is cited a number of times in the article, China Mobile will likely begin carrying the iPhone in the second half of 2013. If Apple’s older, low-priced iPhone models are picked up by China Mobile, Huberty thinks Apple stock will explode to as much as $980 a share.
As for me I loaded up with AAPL@502 on December,17.

Apple CEO Tim Cook met with China Mobile Chairman Xi Guohua today( january 10),
when they discussed “matters of cooperation” and signed a confidentiality agreement. The talks have increased hopes of a breakthrough between the companies that would allow China’s largest operator to offer iPhones. Tim Cook said he is confident the country will soon become Apple’s largest market, with the company planning to increase the number of stores there to over 25 from 11

Apple Inc. (AAPL) and China Mobile (CHL): Who Needs Who More?http://etfdailynews.com/2013/01/15/apple-inc-aapl-and-china-mobile-chl-who-needs-who-more/
“Although China Mobile has the largest mobile subscriber base in the world, Apple is unlikely to see but a small fraction of those sales.
The majority of China Mobile subscribers are on pay-as-you-go plans on “dumb phones.” These people are members of China’s lower and emerging middle classes, and at this point in time do not have anywhere near enough discretionary income to afford Apple wares.
Second, many Chinese customers aching for an Apple phone long ago fled to China Unicom and China Telecom , both of which already offer the iPhone 5. Third, roughly 15 million iPhone users are already on the China Mobile network using unlocked phones and are unable to access the carrier’s 3G network.
The second and third point illustrate not only why the benefit of a China Mobile deal for Apple would be limited, but also why such an agreement would be more beneficial for China Mobile. The company islosing lucrative 3G market share to China Unicom and China Telecom. Even if the iPhone’s popularity fades in the future, customers that have already switched are unlikely to return to China Mobile, barring a sea change in the mobile phone landscape.
As well, Apple would not see its customer base broaden substantially by having existing iPhone customers on China Mobile’s network obtain formal access to the 3G and 4G services. On the other hand, China Mobile would benefit from having an additional 15 million subscribers paying for more lucrative 3G/4G services.
So while Apple would certainly see some new customers as a result of a deal with China Mobile, it’s increasingly evident that such a deal would be more beneficial to China Mobile. As a result, look for China Mobile to potentially back down from its revenue sharing demands in negotiations with Apple and see a deal done sooner rather than later.”